A recent trend in organisation and management is the rise in ‘virtual organisation’ and ‘virtual
teamworking’. To which of the following environmental (PEST) factors is this most directly attributed?
C Rationale: Virtual organisation is the collaboration of geographically dispersed individuals and
teams, specifically using the latest information and communication technology (ICT) enablers: the
Internet, web-conferencing and so on.
The stationery and printing company S Co, has recently upgraded its computers and printers so that
more production has become automated. Many middle managers will now be made redundant. This is
B Rationale: Information technology has enabled managers or staff ‘lower down’ the hierarchy to
make decisions previously made by middle management. This is known as delayering.
Pitfalls: You may have been tempted to think that this was downsizing. Downsizing, however,
means reducing staff from all levels or layers in the business.
Ways in: It is ‘layers’ of middle management that have been removed. This may help to direct
you to the answer ‘delayering’.
Porter’s five forces model identifies factors which determine the nature and strength of competition in an
industry. Which of the following is not one of the five forces identified in Porter’s model?
D Rationale: The other forces are bargaining power of suppliers and rivalry amongst current
competitors in the industry.
Pitfalls: The five forces model is basic: you really need to learn the details…
For what function in an organisation would demographic information about social class be most
B Rationale: Socio-economic groupings are often the basis on which markets are segmented, so
that products/services and marketing messages can be targeted appropriately (to people with the
right levels of income, aspiration, education and so on). You might have paused over Human
Resources, because social class includes education factors, but the data cannot be used to
predict skill availability.
Which of the following is a support activity in Porter’s value chain model?
A Rationale: Procurement, technology development, HR management and infrastructure are support
activities. Inbound and outbound logistics, operations, marketing/sales and service are primary
Which of the following statements about the impact of technological developments is not true?
B Rationale: Technology is no longer regarded purely as a threat to job security: it can also support
higher-level skilling, options for home-working, cleaner and safer work environments, better
employee communications (eg through an intranet) and so on. Option A is true, because IT systems
support lower-level decision making and direct communication between strategic apex and
operational staff: replacing the role of middle management. Option C is true, because new
technologies reduce product life cycles: products and processes can swiftly become obsolete. Option
D should be obviously true: think of e-mail at one end of the scale, and ‘virtual organisations’ at the
In Porter’s five forces model, which of the following would not constitute a ‘barrier to entry’?
C Rationale: Low switching costs means that it will be easy for customers to change from existing
suppliers to a new supplier: this would facilitate entry to the market. The other options should
clearly pose difficulties to a new entrant: not yet big enough to benefit from economies of scale
(against competitors who are); high start-up costs; high degree of recognition of and loyalty to
Three of the following strategies are closely related. Which is the exception?
Rationale: Outsourcing (contracting some of the firm’s activities to external providers) and
delayering (removing levels of the organisation hierarchy) are strategies for downsizing (reducing
the number of staff permanently or directly employed by the firm). Delegating is the process
whereby a superior gives a subordinate part of his or her own authority to make decisions.
Which of the following would be identified as a cultural trend?
B Rationale: Option A may reflect a cultural trend (increasing expectation of quality of working life,
say), but it is a compliance issue. Option C is a demographic trend.
For demographic purposes, which of the following is not a variable in the identification of social class?
B Rationale: Lifestyle is generally considered a reflection of economic status and conditions, not a
determinant of them. (For market segmentation purposes, for example, lifestyle factors are often
measured in terms of attitudes, interests and opinions, rather than purely economic factors.)